The UAE Central Bank said it is looking into the layoffs in the financial services sector to also ensure that Emiratisation efforts will continue to be adhered to.

The regulator, which issued a statement on Saturday to address concerns on how the job cuts could affect the economy and consumers in the UAE, said they want organisations to continue supporting the Emiratisation strategy.

“The Central Bank continues its efforts towards Emiratisation in the banking sector and obliges banks in the UAE to achieve 40 percent Emiratisation within 3 years. In addition, banks play a major role to increase the rate of Emirati workforce in the sector through offering career opportunities for Emirati graduates and professionals,” the central bank said.

The announcement came amid reports that financial institutions are chopping off hundreds of their staff. The regulator said it is closely following the job cuts to ensure that they don’t affect “regulatory compliance and market conduct.” Emiratisation aims to increase the number of UAE nationals in the job market and their contribution to the economy. Under the quota system, every company with more than 100 workers is obliged to hire and retain on the payroll the stipulated number of UAE nationals.

2019 job cuts

Several banks in the country have recently laid off hundreds of employees amid a subdued business environment and ongoing efforts to reduce the number of physical branches and shift to digital banking.

According to media reports in November last year, HSBC terminated the services of 40 of its 3,000 staff in the UAE, while Emirates NBD had cut approximately 400 employees since October. Standard Chartered was also reported to have chopped off more than 100 workers.

Dubai’s Mashreq Bank had earlier announced that it would close half of its branches in the UAE to focus on digitisation and shed about 10 percent of its employees.

The central bank said that banks in the country are “reviewing their business lines,” and are making the necessary adjustments “in view of the fast-evolving competitive environment.” The latest IHS Markit Purchasing Managers’ Index (PMI) indicated that job opportunities in the UAE fell at “one of the strongest rates on record” in January 2020, mainly due to cost-cutting strategies.

“Industry players struggled and often downsized essentially due to demand contraction and a saturated market in the UAE,” Pierre-Emmanuel Dupil, senior managing director for recruitment specialist PageGroup Middle East and Africa, wrote in a report in January.

Economic indicators

Despite the subdued economic environment, the overall real gross domestic product (GDP) in the UAE is estimated to have grown by 2.9 percent in 2019, driven by the growth in the non-hydrocarbon sector.

According to a separate report by the UAE Central Bank, the overall employment in the private sector increased by 2 percent year-on-year compared to a 1.1 percent rise in the previous quarter.

During the last quarter of 2019 alone, at least 38,000 new work permits were issued in the UAE, a huge improvement from the 13,085 new permits issued in the third quarter.

(Writing by Cleofe Maceda; editing by Seban Scaria)

Cleofe.Maceda@refinitiv.com 

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